Brazil’s Grupo RBS says ‘no’ to Instant Articles, but has other uses for Facebook

Grupo RBS in Brazil is grabbing two thorny digital issues by the scruff of the neck and with the same goal: how to use social media and tablet publishing to convert readers to subscribers.

by WAN-IFRA Staff | May 24, 2016

“Our position is very clear: We are not going to distribute our quality papers or any good content on third-party platforms because it dramatically affects the conversion part of our business,” says Andiara Petterle, RBS’ vice president of newspapers and digital media.

With distribution platforms at the forefront of many publishers’ minds, Grupo RBS, one of Brazil’s largest media groups and owner of eight regional newspapers (including its flagship daily, Zero Hora), takes an interesting stance in the discussion. Petterle told WAN-IFRA’s Valérie Arnould how the group is focussing on digital subscriptions and testing its own distribution channel, and uses platforms like Facebook solely as a means to generate traffic and conversions.

Like La Presse in Montreal, RBS is focussing on converting print readers to tablet reading. But there is one major difference: In the Brazilian case, people pay for the content.

Andiara Petterle will join the discussion on distribution platforms at WAN-IFRA’s World News Media Congress in Cartagena, Colombia, June 12-14. She will also give more details about the group’s paid-content strategy at the Small and Mid-Sized Publishers Annual Meeting (June 12, Cartagena).

WAN-IFRA: Brazilian publishers always seem to take an independent attitude towards third-party platforms, so what is RBS’ position regarding Facebook?

Andiara Petterle: For years, we were very open with Facebook, Google and other tech companies, but last year we changed our strategy. We are focussing on digital subscriptions, especially with Zero Hora, our largest newspaper. This is working very well for us. We’ve launched various proprietary platforms in the last year and we are growing very rapidly – 50 percent a year – in digital subscriptions, which is crucial for our future business model.

So to rely on Facebook, especially Instant Articles, is completely out of the question for us.

Regional and local newspapers don’t need Instant Articles. If you have good presence in print and online you definitely don’t need that.

But you can use Facebook to generate traffic and conversions, and it’s a good platform to convert readers into subscribers in our case.

Our position is very clear: We are not going to distribute our quality papers or any good content on third-party platforms because it dramatically affects the conversion part of our business. What we are working on is how to use social media and all other distribution platforms to create a subscription funnel for digital users.

We believe digital subscriptions are the only way to have a sustainable business for the next decade. It really matters how quickly we migrate our print base into our digital subscription base. Our papers have to be very close to the community but also very relevant in terms of content so we can then charge online. We don’t have scale; we don’t have volume, because we are local, so it is impossible to think we can live on advertising using those platforms.

If you look at the Washington Post strategy, they want to be global, they want to have a global footprint, so it seems to make sense for them to use those platforms to really get their brand global and get as big an audience as they need to compete with global brands. It makes sense if you’re not going to live on subscriptions. If you are – and that’s the case for us – it’s definitely impossible to give your best content to distribution platforms.

Can you explain how you are using Facebook?

It’s different for single-copy vs. quality papers. For single-copy papers, you can be a little more flexible with Facebook because you’re not going to convert into subscriptions anyway, so it can help generate traffic.

For the quality papers we are using Facebook in two ways. We create segmented timelines in order to generate more segmented news for different profiles. We are targeting users based on age and interests, so people have different timelines on Facebook. We are targeting people aged 25 to 35 who are fans of a specific soccer team, so we segmented the timeline for a specific soccer team. Thus we have different timelines for different audiences, and the experience that you have with a newspaper is much more customised.

We don’t have free content, so we use all those segmented timelines to generate traffic to our metered paywall. It is important to use Facebook to create these customised timelines, but at the end of the day the idea is to generate more subscriptions. And it’s very important for us – 30 percent of our traffic comes from Facebook and the engagement is incredible.

We also use Facebook to generate all sorts of promotion and subscription offerings. For instance, if we have new columnist, a new product, or we want to create a new type of digital subscription we use Facebook to promote it. It’s an important marketing tool for conversions.

When people come from Facebook, how do you trigger them to subscribe?

If people come from Facebook they get five free articles. If they subscribe with Facebook for free they get 10 more free articles per month. Then you have the paywall. We started this last December, and around 50,000 new customers per month have signed up for free articles. We now have almost 300,000 new subscribers with a conversion rate to paid content of around 3.5 percent. We are also improving our mobile experience because most people registering for free content come from mobile. The experience people have after they leave Facebook has to be compatible, it has to be incredible, and it has to be fast and easy.

Another original aspect of your paywall strategy is a strong bet on your loyal print readers becoming tablet users… and it seems to work well!

Last December, we started testing a model with our paper Zero Hora. We started to offer a subscription model with a tablet and are sort of forcing our print base to migrate to the tablet. Target customers who would like to migrate receive a Samsung tablet and two e-paper editions per day.

The results are very interesting and much more successful than expected. We control the front page of the tablet remotely, so we are starting to use this front page of the tablet to push any sort of app with content or with advertising partners into this space. We are testing what it means to have our own distribution channel where we can control what kind of apps or content or offerings will be there.

The tablet is free but we control all the data, so we know everything that people are reading, for how long, which articles, which columnists – and we can install and uninstall apps. This is a test to find out to what extent we can have our own distribution channel.

How many people do you expect to convert to tablet reading in the next year or so?

We started this pilot project with 3,000 tablets, which we expected would take a long time to give away, but they were gone in two weeks. And then we started to redesign the operation, and we partnered with Samsung and are now developing the distribution strategy together with Samsung.

We might end this year with about 10,000 tablet subscribers, and our idea in the next three years is to reach 40,000. If we can do that, we can really control it and deliver pretty much anything we want – and we won’t be dependent on any other platforms.

We have already given out 4,000 tablets, but we had to stop during February and March because we didn’t have the devices and Samsung couldn’t provide them, but now we’re back on track.

Another aspect of this strategy is that we want to keep the print sales in the metropolitan area but not deliver to rural areas. We want to force rural subscribers to have tablets because distribution costs are much higher outside the metropolitan area.

Often, in similar publishers’ offers, new subscribers receive the tablet for free/cheap if they sign up for a two- or three-year subscription. How does that work in your case?

For the next release of our free tablet subscription offer it will be two years, but for the first release it was only 12 months. And after a year if you want to cancel you can keep the tablet. It’s the same price as the paper, but you get two editions per day and we can deliver a newspaper with more pages than in print. On top, there are a lot of special supplements that we can only launch for the tablet.

We are targeting people who really like print. because the idea is to deliver this e-paper format, which is much better for our older demographics database than a newsfeed app. Though we do push the newsfeed app to the tablet, they usually don’t use it.

Are you making special use of the tablet possibilities for your advertisers?

Very much so, and advertising prices are much higher than regular digital advertising prices. An entire edition is sponsored by an advertiser for the same price as print. We expect to have a database of 40,000 tablet subscribers, which is good for a local newspaper, so you can have a very high CPM. And it’s all interactive. You have all the data from people who are seeing or clicking the advertisement, so you have the same brand awareness that a print edition would give you – but with all the same metrics that Google would offer you.

That’s also something interesting with the tablet app of Canada’s La Presse because they can have ‘live’ data on how long people are viewing the articles and the advertisements, which is very precious information for clients.

Yes, we have this in real time. Of course, at the moment we are being very careful with personal data, but we can target a person specifically because it’s a physical device.

In the future, you could have very segmented advertising. You can push an advertiser’s app right in the front page of the tablet.

This is also our approach to the discussion of alternative distribution channels. We are testing to see if we could create our own distribution channel but with the perception of the value of a newspaper.

Because in our case, the people migrating are mainly print readers and they want to continue to read the way they are used to. They don’t want to go to a website and click on 20 articles and that’s it. They want to have an experience that is closer to print. It targets the older part of our database, which is perfect for us because the tablet is a bridge between print and digital. It gives us the possibility to control the distribution.

And at the same time the tablet is a family device. You have one main customer but the device circulates, so you could reach younger audiences as well.

Indeed. Because it’s very inexpensive compared to print products, we can create niche contents. Content is 10 percent of our cost – it’s our core business – but nothing compared to operation costs.

Already in the first year we make more money on the tablet than we do in print.

Our math was very simple. Average revenue per user from subscriptions was around 1,100 real (US$ 308) per year. It cost us around 600 real ($ 168) per year to print and deliver. And this is very close to the price per year for a tablet. We have a good arrangement with Samsung. It’s a better margin in the first year using the tablet than it is in print.

We are also going to launch segmented tablet products, like fashion verticals, with more women’s content than regular newspaper subscriptions. Because we are in a local market, we can focus on niches and special editions. In Brazil, there’s still an opportunity to leverage content with devices because the tablet base is very small and people are interested.

And we understand that if we are successful, especially being in a local market, we can control the environment and help local advertisers to be more successful.

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